Reuters reported that Chinese inflation will probably rise more than 5% in the year to March, pushing the central bank to raise interest rates.

The China Securities Journal said that although the government has made progress in taming price pressures, the combination of a low base effect, high global commodity prices and rising service costs will push inflation towards three year highs in the coming months.

The newspaper said "Analysts believe there is quite a big possibility that March CPI broke through 5%. As this would clearly make for negative real interest rates, the window for raising rates would again open."

China has raised interest rates three times since October when it began its current monetary tightening cycle in earnest. Analysts polled by Reuters expect a further two rate increases in the first half.

The China Securities Journal does not necessarily reflect official policy, but as one of the country leading financial newspapers, it does have a reasonably good track record in forecasting policy moves.

(Sourced from Reuters)